Market Update

by Olivier on November 8, 2012

Quick update to thank everybody for their patience. Now it’s time to get back to work! Many say it is of paramount importance to take care of yourself. They go on with advice like ‘less is more’, the ‘importance of taking breaks’ etc. Sadly, most simply never follow their own advice. I badly needed a break so I simply did what I had to do. In the long run it pays to take breaks, especially during choppy markets where it is best to do nothing in order to protect capital. That’s exactly what I did.

‘Trading is a marathon.’ Also keep in mind the following pieces of trading advice:

Finally no more election drama. Now the likelihood that the markets will start a directional move has increased. A few potential trends I am closely monitoring:

A few months ago the miners have started to outperform the metals. I still see lots of miners getting killed after bad earnings. But the selling pressure is starting to reach levels I would consider exhaustive.

The low risk royalty companies FNV – Franco Nevada, SLW – Silver Wheaton, RGLD – Royal Gold and SAND – Sandstorm Gold are leading the way. They are all trading close to their all time highs. No overhead resistance i.e. odds for continued out-performance are higher than stocks trading near their lows.

Tax loss selling season and potentially increased higher long-term capital gains taxes in the US down the road. Stocks trading at 52 week or all time lows could encounter huge selling pressure as traders get rid of their losers for tax reasons. LSG – Lake Shore Gold comes to mind here. The same applies to winners that have started to experience selling pressure, AAPL – Apple comes to mind here.

Stocks bucking the trend. The stocks that have moved up during the past 2 months while the market went down are likely to become leaders once the market starts moving to the upside. I am monitoring those in the background and have started to compile a list of focus stocks with high odds of becoming future winners.

The young man knows the rules, but the old man knows the exceptions. – Oliver Wendell Holmes